Property, Plant and Equipment Accounting Policy

Property, plant and equipment are recorded at cost, including applicable construction-period interest, less accumulated depreciation and are depreciated principally over the following estimated useful lives: new buildings and land improvements, from 10 to 40 years; and new machinery and equipment, from 4 to 20 years. The principal methods of depreciation are as follows: buildings and land improvements, 150% declining balance; and machinery and equipment, sum-of-the-years’ digits. Capitalized internal use software is included in Other assets and amortized using the straight line method over 5 years. Capitalized software as a service is included in Other assets and amortized using the straight line method over the term of the hosting arrangement which is typically no greater than 5 years. Boeing periodically evaluates the appropriateness of remaining depreciable lives assigned to long-lived assets, including assets that may be subject to a management plan for disposition.

Long-lived assets held for sale are stated at the lower of cost or fair value less cost to sell. Long-lived assets held for use are subject to an impairment assessment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset.

Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.

Boeing Co.’s gross property, plant and equipment increased from 2016 to 2017 and from 2017 to 2018.

Property, plant and equipment, net

Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.

Boeing Co.’s property, plant and equipment, net declined from 2016 to 2017 and from 2017 to 2018.

As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient.

Boeing Co.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

Estimated total useful life

Over longer time periods, this ratio is a useful measure of company’s depreciation policy and can be used for comparisons with competitors.

Boeing Co.’s estimated total useful life of depreciable property, plant and equipment declined from 2016 to 2017 but then slightly increased from 2017 to 2018.

Estimated time elapsed since purchase

The approximate age in years of a company’s fixed assets. Useful for comparison purposes.

Boeing Co.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

Estimated remaining life

Boeing Co.’s estimated remaining life of depreciable property, plant and equipment declined from 2016 to 2017 and from 2017 to 2018.

As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient.

Boeing Co.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.